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UAE officials tell Aabar to raise minority buyout offer

Gov't officials tell Abu Dhabi company to raise its initial offer by more than a third.

By Reuters

Sun 18 Jul 2010 01:18 PM

UAE government officials have told Aabar Investments to raise its buyout offer to minority shareholders by over a third after the Abu Dhabi company angered investors with a lowball bid.

Aabar, controlled by government investment vehicle International Petroleum Investment Corp (IPIC), must increase the price to 1.95 dirhams per share from the 1.45 announced last week, the UAE's bourse watchdog said in a statement on Sunday, citing the ruling of a panel that included officials from the UAE economy ministry.

The announcement from the Emirates Securities & Commodities Authority (ESCA) sent Aabar's share price up 9.7 percent to 1.59 dirhams, near the 10 percent limit on daily share movements, and drew renewed criticism from an investment community already angry that the initial offer was so low.

"The timing has been unfortunate. The suggestion that 1.45 would be the trade price would have caused investors to sell around that level," said Zahed Chowdhury of Al Mal Capital.

"The fact there are no clear rules and regulations for such events didn't help anybody."

Another investor said trading in the investment firm, whose holdings include about 9 percent of German carmaker Daimler and 4.99 percent of Italian bank UniCredit, should have been halted after news on July 12 that the government panel would study the offer.

"Who will profit and who will lose and who will compensate (those) who had to sell last week between 1.42 and 1.45?" said Mohamed Ali Yasin, CEO of Shuaa Securities.

"I believe that the small investor got mostly hurt in this, and he is the one the regulator is trying to protect the most in this market, and that is not what happened here."

Shareholders complained last week that the 1.45 dirham price to buy out minority investors and delist Aabar was too low.

In Sunday's announcement, ESCA also asked Aabar and IPIC To change the offer period to run from July 20 until August 5. The original period was July 12-August 1.

"Based on the telephone conversation which took place today with representatives of the two companies, Aabar and IPIC (on the new price and the new offer period) ... we would like to inform you that there are no objections to you calling an EGM for Aabar on Aug. 15", ESCA statement said.

The delisting move was announced earlier this year and some investors had hoped for a much higher price.

It takes Aabar, one of the more transparent groups in the secretive world of sovereign funds since its IPO in late 2005, back into the shadows, and marks the first retreat of a local firm from the Abu Dhabi bourse.

Aabar is 72-percent owned by Abu Dhabi government investment vehicle International Petroleum Investment Corp (IPIC), according to Reuters data, and has assets estimated at about $10 billion. The new offer values minority holdings at about 2.21 billion UAE dirhams ($602 million) up from 1.64 billion UAE dirhams ($447 million).